Latin America had an important development in HVAC / R. However there is still much room for improvement for a region located next to the big markets. It is still much based on purchase prices.
by Julian ArcilaThe Latin market HVAC / R and building automation, like the last four years, continued growth trend and seems to close 2008 with positive figures, according to the comments of several experts interviewed by AC / R Latin America to its traditional economic analysis of the region.
The statements of those directly related to this market are quite positive and usually offer growth expectations that are above the forecast of growth of the region, although at the beginning of the year had been set at 5%, it was corrected shortly after the second half by ECLAC, finally reaching a 4,7%.
To make a target of the most important events in this region with regard to the air conditioning is important analysis, however, understand that there are still many scenarios in which Latin America can be and is being an interesting market, but development and growth will be a quite slowly, given the rising investment culture of local businesses and the importance of the price factor when shopping, I element the latter with great impact in curbing the evolution of the Latin countries as global markets .
However, growth is a reality and part of the need of the different continents to implement efficient solutions from the energy point of view, but also to implement friendly equipment with the environment; Latin America was no exception and the last four years, which were very positive from the financial point of view and this element promoted the economic condition and led to significant investments to improve the installed capacity in many markets.
This year will go down in economic history as the period in which it was found that not even the most powerful nation in the world could be safe from an economic meltdown caused by multiple factors such as the wrong figures of banks, derived from the moratorium In subprime debts; The growth of the US trade deficit; Falls in consumption and employment generation; In addition to the moratoriums on not a few financial products that the only thing that they produced were enormous gaps in the banking coffers, with the well-known fall in the stock values that dragged to losses to the most important exchanges of the world. Latin America, as expected, Little could do to get rid of this economic spiral, and in addition to the falls in the most important markets in the region, these countries have had to face quite negative elements such as the fall in prices of various raw materials such as copper and oil thanks To cuts in demand; This in turn will lead to a drop in consumption in the region, as purchasing power is obviously being reduced in these countries. The first indication of a complicated environment for the region is related to rising inflation (this year is expected to be Indicator is between 9 and 10% in the consolidated region), which has been accentuated mainly in economies such as Venezuela and Argentina. The dollar, which had been less than a currency, began with a strengthening phase, creating a vicious circle in which imports become more expensive, but exports are more profitable for local producers; However, with the fall in demand in the first economies and with a possible entry into recession by the European bloc, expectations, without being bad, should be cautious for Latin countries. Perhaps because of this, the Economic Commission for Europe Latin America and the Caribbean -CEPAL- corrected the region's economic growth target for 2008, which was initially proposed at 5%, to officially be 4,7%. However, at the end of the year growth expectations will still be maintained due to fiscal surpluses and reductions in public debt in several of the Latin American economies. But where there is a big rudder is in the projections for 2009. Everything seems to indicate that next year will be the first to bring global recession after the Second World War and Latin America can not escape it. Preliminary figures from the IMF indicate that in the next year the region will grow only an 2,5% and some of the deeper cases are expected for Mexico and the United States, where growth expectations are around 0,9% and 0,7%, respectively. To avoid this, several of the central banks of the main economies of the world decided a significant reduction in interest rates.The CVAC / R segment
A general one can say that was a positive 2008 industrial HVAC / R and general automation year. This article will deal basically what happened against refrigerants, controls and evaporators and condensers, components which are directly related to the industry as a whole.
Again, the growth has been seeing in regional economies, at least until the end of this year, can be seen as the most important factor boost consumption of air conditioning solutions -sumado this to some growth observed in construction -; the increase in food production, meanwhile, boosted consumption of cooling solutions and this in turn was reflected in the demand for evaporators and condensers.
On the other hand, global concern about energy consumption also reached Latin America, specifically the Central American countries, which are oil importers. This situation prompted the marketing of control devices; refrigerants are not left behind and the current transition of substitution of substances harmful to the environment did the same with the consumption of "green" substances.
A year of commercial expansion1.
For air conditioning 2008 segment was a positive year. The market maintained a growth trend driven in part by improving the technical level of Latino professionals. The demand for control solutions and air conditioning found several factors that boosted, among which one can say that the most important was the realization of significant investments by large retail chains in different countries, resulting in construction commercial properties, residential also driven by third parties.
The Latino market enjoyed a certain maturity, but it can be termed as relative, since although there is progress still needs to work more on education for the public to more easily adopt the technologies available in the market. Another highlight in front of maturity is that every day they win end users, caring more for items such as energy efficiency and environmental protection, which has resulted positively in the segment controllers, air conditioners higher efficiency but also those using refrigerants friendly to the environment.
An important fact is that the efficiency factor or environmental conservation has become less important when decision makers are contractors or builders, who exercises when the latter function is different from the owner of the work.
Conjunctural factors driving the market forward can be summarized in a progressive growth (seen more clearly in the first half of 2008) of both residential and commercial construction sector; this situation stems from the political stability that with the exception of Venezuela, was seen in Brazil and South America.
For some companies like Full Gauge, performance during 2008 has been so positive expectant 80% growth in sales throughout Latin America.
The main trends
The world of controls is directly related to the air conditioning, although from the last three years have increasingly developed solutions to control energy consumption and various functions in refrigeration systems, industrial and commercial.
As regards the implementation of control devices for air conditioning, the market had a noticeable inclination towards consumption solutions for the control of energy expenditure, combined with automation management systems. The important thing in this regard is that end users are much more concerned to know in detail the consumption figures before and after application of controllers, depending mainly falls on the device management software. The latter was observed strongly in Venezuela, Peru, Colombia, Mexico and Central America.
More specifically with regard to air conditioning, demand leaned toward the acquisition of equipment offering greater efficiency in terms of tonnes per KW of energy consumption; there was also an increased interest in systems that combine controllers, inverters, free cooling applications and use of refrigerants friendly environment. An important fact found in the market is that in the case of global companies or with some degree of social responsibility the use of certified systems in energy efficiency has been a factor.
In that sense if it is demanded to discuss solutions for a company like Johnson Controls these were:
- Environmental conditioning equipment to improve efficiency in partial load and meet the standards and codes of international agencies such as: EER
- Applications automation and remote operation through a BAS system and open protocols
- heat recovery mode to use hot water
- Equipment with low sound generation.
A market with high environmental impact2.
Perhaps one of the segments of the HVAC / R most affected by the current situation of the industry is the refrigerant; today, the whole planet is turned to the implementation of an environmental policy that permits full compliance of ordinances as the Montreal and Kyoto protocols.
In this regard, the replacement of CFCs and other ODS (Substances that Deplete the Ozone Layer) had a significant impact on the destinies of refrigerant 2008 sector. In this sense, the market (Latin America, according to some, could represent the 5% of the world market gas) showed an interesting growth over the last year, with Brazil, Argentina, Colombia and Peru the best niches for this sector.
Some important trends
However, there are also those who qualify to 2008, compared with 2007 was a market ups and downs, where the depressions are mainly seen in the 2do quarter and the same is expected to happen during the last three months.
This perhaps gave the market is still very weak with regard to the adoption of regulations and those who do it because they have an export market (this was the case of countries like Mexico) which must respond. It can not be put aside one of the evils that has always affected the region: the price; yet in many countries, especially in regard to market reruns are still buying based on this factor, to the detriment of the quality of the compounds (something that was found in Brazil and Central America, mainly).
Still, for the moment, Latin America is seen in the global context as a technology follower, not a developer. In this sense, companies like Dupont (whose sales rose 15% this year) believe that there is still significant room to work on improving the market by leveraging new technologies in terms of energy efficiency.
But what was the impetus for the sector to growth? For some professionals demand system solutions air conditioning and refrigeration was directly related to an improvement in the purchasing power of the Latin American population, it is no secret that a major market that is opening up for suppliers of these industries is the residential area. In that sense, the good work done in Latin America for poverty reduction could have had an impact on the increase in the purchase of the above equipment.
In markets where some length in front of these compounds was demonstrated, back in the first half of the year, this situation seems to be attributed to several aspects, including an increase in production costs; for some companies which have their seat in the United States, the impact of hurricanes in the season 2008 also have its effect in the last months of the year, so the new dollar appreciation trend will add.
Another trend to consider is the exponential growth of automotive air conditioning, which will drive parallel market coolants in Latin America, which can currently be valued at U $ 400 million annually.
In search of opportunities3.
The refrigeration sector, mainly commercial, is perhaps one that is making better use of external economic circumstances of the moment. The increase of free trade on the planet and -produced food shortages sometimes weather problems) in some regions of the globe have led the frozen product market is experiencing a boom.
And to confirm this, just remember that in an article published by the Chilean newspaper El Mercurio in late 2007 is outlined that, as noted by southern industrial while participating in the Anuga fair in Germany, the largest trade fair in the world. According to the newspaper review, the great global trend in the food sector, with regard to European countries, is in frozen prepared foods that are easy to prepare.
In this direction, not a few Latin producing companies have invested to improve its cooling program in order to occupy an important place in the growing world of frozen foods, a factor that has undoubtedly opened a wide spectrum of possibilities for system suppliers refrigeration.
The outlook has been quite positive and for companies such as Brazil and Deltafrio Heatcraft, those involved in the development of equipment for cooling systems (evaporators and condensers, etc.), the increase in their numbers to 2008 20% can approach.
Despite this significant growth, yet it can be said that the market is immature and far to take advantage of all the technology available in advanced markets like the US and Europe, which focus heavily on energy efficiency, this mainly due to technical difficulties or high costs.
It also is to say that the refrigeration sector is undergoing many changes through the process of replacing refrigerant gases and the same global need for frozen food, which has become more of our economies in some of the leading providers of consumer countries. To this must be added the establishment of laws, in countries like Brazil, which promote greater care of refrigerated foods; this situation has become another niche opportunities for those who offer solutions for cooling.
In short, there has been a favorable environment in which they have come together three factors: product availability, quality and price.
The strongest trend is towards the above, in relation to the growth of exports of frozen foods, which has been mainly in sectors such as grains, fish and flowers, among others.
Along with this it is worth mentioning the use, increasingly frequent, alternative materials in the manufacture of cooling solutions, such as ammonia, which seeks to reduce the uncertainty which means the use of copper, a material that maintains a high swing meet their international prices. Aluminum has positioned itself as a great alternative for this purpose.
Another important trend is the increasing use of glycol, mainly in markets such as Brazil, Argentina and Colombia. A point segment to pay attention: the supermarket.
Latin America is the way to development in air conditioning and refrigeration. There is a significant growth and a favorable inclination towards energy efficiency, but do not forget a factor that is really important when developed as a market: political stability. What is happening in countries like Venezuela and Ecuador, whose governments do not guarantee stability or free enterprise, are negative signals to investors away thin business climate.
At the moment, technological development in our countries remains at very low levels compared to the developed world. The recommendation for now is to continue working for the other countries of the region equal the productive capacity of nations such as Mexico, Brazil and Argentina, and day after day red tape is eliminated in order to promote trade between the various peoples of the region.
1. Companies involved providing expertise for the analysis segment air conditioning and controls were Full Gauge (Rodnei Peres, Department of Foreign Trade) and Johnson Controls (Alicia Bandala, director of systems for Latin America Building Efficiency division).
2. To make the analysis refrigerants segment was attended Dupont (Mauricio Xavier, manager for refrigerants and fluorochemicals business in Latin America). Other recognized sources asked his name reservation.
3. To make the cooling segment analysis was attended Heatcraft do Brasil (Paulo Eduardo de Oliveira, manager of sales and exports) and Deltafrio (Marcelo Marx, managing director).